Palmares v. Protective Life Insurance Company
Filing
32
OPINION and Order Signed by the Honorable William T. Hart on 11/27/2012:(mb, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
Noe Palmares,
Plaintiff,
v.
Protective Life Insurance Company,
Defendant.
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No. 11 C 3281
OPINION AND ORDER
Plaintiff Noe Palmares, as an insurance beneficiary, brought this action in
the Circuit Court of Cook County, Illinois in order to recover the entire proceeds of
a $250,000 life insurance policy (the "Policy") insuring the life of his late wife,
Jessimae Palmares ("Jessimae"). He also seeks a statutory bad faith penalty for
failure to pay insurance benefits.1 The case was removed to this court by defendant
Protective Life Insurance Company ("Protective"). Plaintiff is a citizen of Illinois
residing in Cook County. Defendant is incorporated under the laws of the State of
1
The Illinois Department of Insurance denied plaintiff's complaint
against Protective without prejudice to seeking a remedy through the legal system.
Tennessee with its principal place of business in the State of Alabama. Defendant
conducts insurance business in the State of Illinois. The amount in controversy
exceeds $75,000. This court has jurisdiction of the parties and the subject matter.
28 U.S.C. ยง 1332(a).
After the death of his wife, plaintiff submitted to Protective a claim for
the proceeds of the Policy. During the claim process, Protective determined that
Jessimae misstated the date of her birth in her application for insurance, and that
the premiums charged were lower because her date of birth was wrong. Instead of
paying the full amount of the Policy, Protective paid plaintiff $153,509, making an
adjustment for what the premiums would have been based on Jessimae's correct
age.
Plaintiff disputes that Protective has produced the actual Policy issued,
disputes that the application was attached to the Policy, and, if it was attached or
applicable, he disputes that the actual age of the decedent was wrong or that the
premiums paid were inadequate. He also contends that the Policy became
incontestible two years after it was issued.
The case is before the court on the parties' cross-motions for summary
judgment. On a motion for summary judgment, the entire record is considered
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with all reasonable inferences drawn in favor of the nonmovant and all factual
disputes resolved in favor of the nonmovant. Crawford v. Metro. Gov't of
Nashville & Davidson Cnty., Tenn., 555 U.S. 271, 274 n.1 (2009); Malen v. MTD
Prods., Inc., 628 F.3d 296, 303 (7th Cir. 2010); Stokes v. Bd. of Educ. of City of
Chicago, 599 F.3d 617, 619 (7th Cir. 2010). The burden of establishing a lack of
any genuine issue of material fact rests on the movant. Ponsetti v. GE Pension
Plan, 614 F.3d 684, 691 (7th Cir. 2010); Outlaw v. Newkirk, 259 F.3d 833, 837
(7th Cir. 2001). The nonmovant, however, must make a showing sufficient to
establish any essential element for which he or it will bear the burden of proof at
trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Montgomery v. Am.
Airlines, Inc., 626 F.3d 382, 389 (7th Cir. 2010). The movant need not provide
affidavits or deposition testimony showing the nonexistence of such essential
elements. Celotex, 477 U.S. at 324; Freundt v. Allied Tube & Conduit Corp.,
2007 WL 4219417 *2 (N.D. Ill. Nov. 29, 2007); O'Brien v. Encotech Constr.,
2004 WL 609798 *1 (N.D. Ill. March 23, 2004). Also, it is not sufficient to show
evidence of purportedly disputed facts if those facts are not plausible in light of the
entire record. See Lorillard Tobacco Co. v. A & E Oil, Inc., 503 F.3d 588, 594-95
(7th Cir. 2007); Yasak v. Ret. Bd. of Policemen's Annuity & Benefit Fund of
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Chicago, 357 F.3d 677, 679 (7th Cir. 2004); Lampley v. Mitcheff, 2010 WL
4362826 *6 (N.D. Ind. Oct. 27, 2010). As the Seventh Circuit has summarized:
The party moving for summary judgment carries the
initial burden of production to identify "those portions of the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, which it
believes demonstrate the absence of a genuine issue of
material fact." Logan v. Commercial Union Ins. Co., 96 F.3d
971, 978 (7th Cir. 1996) (citing Celotex Corp. v. Catrett,
477 U.S. 317, 323, 106 S. Ct. 2548 (1986) (citation and
internal quotation omitted)). The moving party may discharge
this burden by "'showing'--that is, pointing out to the district
court--that there is an absence of evidence to support the
nonmoving party's case." Celotex, 477 U.S. at 325, 106 S. Ct.
2548. Once the moving party satisfies this burden, the
nonmovant must "set forth specific facts showing that there is
a genuine issue for trial." Fed. R. Civ. P. 56(e). "The
nonmovant must do more, however, than demonstrate some
factual disagreement between the parties; the issue must be
'material.'" Logan, 96 F.3d at 978. "Irrelevant or unnecessary
facts do not preclude summary judgment even when they are
in dispute." Id. (citation omitted). In determining whether the
nonmovant has identified a "material" issue of fact for trial, we
are guided by the applicable substantive law; "[o]nly disputes
that could affect the outcome of the suit under governing law
will properly preclude the entry of summary judgment."
McGinn v. Burlington Northern R.R. Co., 102 F.3d 295, 298
(7th Cir. 1996) (citation omitted). Furthermore, a factual
dispute is "genuine" for summary judgment purposes only
when there is "sufficient evidence favoring the nonmoving
party for a jury to return a verdict for that party." Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505
(1986). Hence, a "metaphysical doubt" regarding the
existence of a genuine fact issue is not enough to stave off
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summary judgment, and "the nonmovant fails to demonstrate a
genuine issue for trial 'where the record taken as a whole could
not lead a rational trier of fact to find for the non-moving party
. . . .'" Logan, 96 F.3d at 978 (quoting Matsushita Elec.
Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587,
106 S. Ct. 1348 (1986)).
Outlaw, 259 F.3d at 837.
Based on the documents submitted by the parties, including the
deposition of plaintiff, the facts assumed to be true for purposes of ruling on
defendant's motion for summary judgment are as follows. On July 15, 2004, a
20-year term life insurance policy was issued to Jessimae by Protective's
predecessor in interest, Chase Life Insurance Company ("Chase"), with a policy
date of August 4, 2004. Plaintiff testified in a deposition that he and Jessimae each
mailed applications for a Zurich Life Insurance Company ("Zurich") policy on
Zurich forms provided to them by an agent for Zurich. The Zurich application
form completed by Jessimae named Jessimae as the beneficiary. An amendment to
the application was faxed to the agent or the company on July 22, 2004 naming
plaintiff Noe as beneficiary. The Zurich application produced in this litigation
admittedly bears Jessimae's signature and states her birth date as December 29,
1971 rather than December 29, 1970, which is the correct date. On July 1, 2004,
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before the issuance of the Policy, Chase acquired Zurich and the Policy in dispute
was issued by Chase. Thereafter, on July 3, 2006, Protective acquired Chase.
Jessimae died on April 25, 2010. Plaintiff contacted Protective to claim
the proceeds of the Policy. Plaintiff had lost the original Policy. During the claim
process, plaintiff represented that his wife was born in 1970. The documentation-her death certificate and driver's license-- confirmed that her birthday was
December 29, 1970. In accordance with Illinois law, 215 ILCS 5/224(1)(d), the
Policy expressly provides that if there is a misstatement of age or sex, the benefits
under the Policy are those which the premiums would have bought for the insured's
correct age. Protective Life adjusted the face amount of the Policy using premium
rates for a 20-year term life insurance contract of a female 34 years of age rather
than 33 years of age. The result was a large reduction in the insurance payable
from $250,000 to $153,509. Plaintiff does not dispute the actual accuracy of this
calculation under applicable underwriting and contract provisions. How, or under
what circumstances, this error occurred is not an issue in this case.
Protective provided plaintiff with a copy of the Chase Policy and
produced a copy of a Zurich application signed by Jessimae. Plaintiff attached the
Chase Policy to the complaint initiating this action, but contends that issues of fact
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exist as to whether the documents provided are copies of the original Policy for
which application was made and issued. He also questions whether the application
signed by Jessimae was ever made part of the Policy by attachment thereto because
the document numbers of the copies of the Policy and application produced are not
in sequence and the application was made to Zurich. The application appears to be
on a Zurich form, it is signed by Jessimae, and it is the only application before the
court.
Protective explained the change in ownership, which plaintiff does not
dispute, resulted in the issuance of a Chase Policy. Protective also states that its
policies and applications are kept in separate files.2 There is a requirement that a
policy delivered to an insured have a copy of the application attached in order to
incorporate the insured's representations into the contract . 215 ILCS 5/224(c).
However, there is no shown duty to keep such documents together in the files of an
insurance company. Failure to keep such documents attached together does not
give rise to an inference that the application was not incorporated into the
2
Plaintiff argues that defendant's affidavit explaining the practice of
filing applications apart from policies cannot be considered because the affiant was
not disclosed as a potential witness. If this explanation of insurance practice was
known to be a part of the defense of the case at the outset and if plaintiff had made
a request for discovery pursuant to Fed. R. Civ. P 56(d)(2), the objection could be
considered.
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insurance contract or that a copy of the application was not attached to the lost
policy delivered to the insured. Moreover, plaintiff has not testified that there was
no attachment of an application to the lost policy when it was delivered. The only
reasonable inference is that the application produced with Jessimae's admitted
signature is the only application that was made and that it was a part of the Policy
issued by Chase.
Plaintiff also argues that fax numbers on documents raise doubts about
the transmission of the original application. Whatever question there may be about
such markings is not relevant because plaintiff testified that he mailed the original
application. He testified that he faxed an application amendment dated July 22,
2004 which corrected the beneficiary designation. What was sent by fax does not
create a material issue of fact relating to the contents of the Policy or application or
the attachment of the application to the Policy.
Plaintiff also argues that the Policy correctly listed Jessimae's age as 33,
which was her age on her last birthday prior to August 4, 2004, which is the
customary manner of stating age in the United States. However "Age at Issue" is a
defined term in the Policy and the definition is not fully consistent with the
customary manner of expressing age. Age at issue is "[t]he insured's age nearest
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birthday on the Policy Date." The Policy Date is August 4, 2004 and Jessimae's
December 29 birthday in 2004 (when she turned 34) was the nearest birthday to the
Policy Date, not when she turned 33 more than seven months earlier on December
29, 2003. Under the terms of the Policy, if her application had correctly listed her
birthday as December 29, 1970 instead of December 29, 1971, the correct "Age at
issue" should have been stated as 34 not 33, and different rates would have applied.
At the time of Jessimae's death in April 2010, the insurance premium
had been pre-paid for additional months and a $38.75 refund was made for the
period after her death. Plaintiff argues that this amount more than covers any
deficiency in premiums due as a result of the age misstatement. This argument
ignores Policy provisions which govern premium refunds, age statements, and
principals of insurance underwriting. The court cannot ignore or rewrite the terms
of the Policy. Gore v. Ind. Ins. Co., 376 Ill. App. 3d 282, 876 N.E.2d 156, 163
(1st Dist. 2007); Klemp v. Hergott Group, Inc., 267 Ill. App. 3d 574, 641 N.E.2d
957, 962 (1st Dist. 1994).
Plaintiff also argues that the face amount of the Policy must be paid
because, under Illinois law, the Policy became incontestable two years after it was
issued. 215 ILCS 5/224(1)(c). Protective is not contesting validity or trying to
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rescind the contract, but is rather applying the terms under Illinois law with respect
to misstatements of age. See 215 ILCS 5/224(1)(d). There is no temporal
restriction on the application of this statute; it expressly states that it may be
applied at any time before final settlement under the policy. See generally Amica
Life Ins. Co. v. Barbor, 488 F. Supp. 2d 750, 758-59 (N.D. Ill. 2007).
Having found no violation of the Policy or bad faith withholding of
payment of proceeds, summary judgment must be granted on defendant's motion.
Plaintiff's motion, therefore, need not be separately addressed.
IT IS THEREFORE ORDERED that defendant's motion for summary
judgment [20] is granted and plaintiff's motion for summary judgment [28] is
denied. The Clerk of the Court is directed to enter judgment in favor of defendant
and against plaintiff dismissing plaintiff's cause of action with prejudice.
ENTER:
UNITED STATES DISTRICT JUDGE
DATED: NOVEMBER 27, 2012
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